There is a significant difference in mobile home insurance vs. standard homeowner’s insurance. That difference is in the amount one is paid when putting in a claim for benefits, due to fire, wind or natural disaster.
Even if you are insured by a well-known company, such as Allstate, the laws pertaining to policy pay-outs are the same. Mobile homes are only insured for the value of the exact cost of the mobile home when purchased. Despite depreciation, or inflation, the most one can collect is directly related to the purchase price and no more.
Most mobile home owners can, and do, insure “household contents” which pays out in replacement benefits such as furniture, loss of personal items, TV’s etc.
Unlike mobile home insurance, standard homeowner’s insurance will naturally pay out more because a standard home has more value. Homes do depreciate in value and a policy will usually be issued to cover the cost of replacement value. However, there can be variations of the amount you will receive. An insurance adjuster will investigate and make a determination, where as the mobile home owner will receive a flat fee of the purchase price…assuming the mobile home can not be restored.
Unlike the standard home policy, even if the mobile home is 20 years old, the benefit never changes. However, the amount paid is usually not enough to replace the mobile home, due to the rise in cost for a newer mobile home.
Example: Purchase price of a new mobile home, 20 years ago, is $23,000. If you have a disaster today, the insurance will pay you $23,000 and an average of $10,000 for contents. When you try to buy a new mobile home the cost is much higher today, due to inflation, replacement cost will run upwards of $60,000 (single-wide mobile home). Clearly, the $23,000 will not cover the cost of a new mobile home.
A standard homeowner’s home is valued at $200,000. If a fire destroys the home, the value of the policy will cover the cost of replacement value, less depreciation and/or inflation costs of materials. However, no matter the cause of destruction, your policy will never pay out more than what the market value of your home is worth.
Standard homeowner’s insurance or mobile home insurance, both must be considered carefully when purchasing a policy. It is a good idea to go over a policy thoroughly with your agent. There are more options offered to homeowners. Mobile home owners, even if the mobile home is on a permanent foundation, are still considered “movable” and do not go up or down in value. Original purchase price is what is paid out, should a disaster happen and there are no other options.